CFPB and Insurance Regulation

The CFPB has fined a bank for improper sales practices in connection with sales of insurance as an “add-on product,” subject to its regulation, and issued guidance on “add-on products” that has had a chilling effect on the sale of secondary bank products. Pursuant to explicit statutory authority, the agency has also issued rules banning the financing of credit insurance and debt protection products with certain mortgages and rules that govern lender-placed insurance.

The agency has not yet finalized the Federal Reserve Board’s proposed model disclosures for credit insurance and debt protection products, which were transferred to the CFPB. The Federal Reserve’s proposal contained incomplete disclosures that would have had the effect of discouraging consumers from purchasing these products.

ABA's Position 

Under Dodd-Frank, the CFPB has no jurisdiction over the business of insurance. There are strong limitations on the agency’s authority in the Dodd-Frank Act that the agency should respect, and to the extent the agency encroaches into the business of insurance, it threatens the state-based insurance regulatory system.

With respect to the pending credit insurance and debt protection disclosure rule making, ABA recommends the harmonization of the credit insurance and debt protection disclosures mandated by the Truth in Lending Act and those established by the OCC. We further recommend that regulations move toward the model disclosures put forward by the Debt Cancellation Coalition.​

 

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Questions? Contact Sarah Ferman​ for more information.